Global economic crisis continue to infect Indonesian currency. Many foreign investors sell their rupiahs and buy other currencies such as Euro and U.S. dollars to cover their investment losses in Europe and the U.S. Analysts see and partly hope that this condition is temporary. They predict that in no time investors will be able to recover their business losses and start to invest their money back to Indonesia in forms of buying Rupiahs and Indonesian stocks or obligations.
However, investors also wait and see on what The Fed will decide on the stimulus fund to support the U.S. economy which will eventually also help some part of the world’s economy. The meeting will be held from September 21st to 22nd this year and all is waiting for good news to encourage positive market sentiment. Like always, market is about perspective. If the Fed at least says yes to the third stimulus fund program, that will help the market to rebound and gain its momentum. Yet until now, there is no sign that the Fed will implement this aid. Thus, investors tend to release Indonesian Rupiahs and go buy dollar to elevate its value in the global market. This is actually in contrast of what the U.S. government aims with its currency. It wants the dollar to weaken a little bit in relation to the declining interest rates 2 years ahead. Supposedly, this policy is to stimulate economic activities in real economic sectors, domestically.
In addition to that, Europe economic crisis is still ongoing creating nervousness in the market. This is due to more delays from donor countries lending their money to Europe.
To avoid uncontrollable plummeting of Rupiahs, Indonesian Central Bank, the BI intervenes by releasing its foreign reserves as much as 2.6 billion U.S. Dollars. Without this intervention, Rupiahs will most probably plunge deep to IDR 9,000 per U.S. Dollar. The BI is optimistic about the situation despite the declining Rupiahs as long as Global crisis find its end soon.